Money & Debt

If you have unpaid debt, you might be sued. A debt collection lawsuit asks the court to enter a judgment against you. This gives the company that owns the debt, called a creditor, more tools to collect from you.

You can’t be jailed for not paying your debts. Since the first Illinois Constitution in 1818, the state has rejected the idea of debtor’s prison. 

However, if a judge orders you to do something during a lawsuit, like appear in court or respond to a citation to discover assets, and you don’t follow the order, the court can issue a warrant for your arrest.

Responding to a collection lawsuit can feel overwhelming, especially if you believe the creditor has made a mistake. But you have options, and understanding the process gives you control. Learn more in Responding to a debt collection lawsuit basics and Discovery and motions in consumer debt cases basics.

Note: Gather all your evidence and keep it in a safe place. Many debt collection lawsuits are decided based on written records, such as letters, statements, and notes from phone calls.

How debt collection lawsuits work

Debt collection lawsuits begin when a creditor files a complaint in court. The creditor is the plaintiff, meaning the party asking the court for help. In a debt case, they are asking the judge to enter a judgment that lets them collect money from you.

If the creditor gets a judgment against you, they may be able to:

• Freeze your bank account,
• Garnish your wages, and
• Take other legal steps to collect the debt.

Learn more in How a debt judgment can be collected basics.

Ignoring a debt collection lawsuit can have serious consequences. Here’s what can happen if you don’t respond:

• The judge may enter a default judgment against you. This means the court decides in favor of the creditor without hearing your side,
• If you file a motion to vacate the judgment within 30 days, the court may reopen the case and let you respond,
• If more than 30 days pass and you don’t file anything, it becomes tough to undo the judgment,
• Once the creditor has a judgment, they can freeze your bank account or garnish your wages at any time unless you are collection-proof, and
• You may receive a citation to discover assets or a court order requiring you to appear. If you don’t follow the order, you could be arrested.

Understanding who is suing you

You may not recognize the name of the company listed as the plaintiff in the lawsuit. This is common. Debt can be bought and sold without your permission, and you may not know who owns the debt now.

An original creditor is the company or person you first owed money to. For example, this could be the credit card company that issued your card or the bank that gave you a loan.

A debt buyer is a company that purchases old debt from the original creditor. They often buy thousands of accounts at once for pennies on the dollar, then try to collect the full amount.

A collection agency is hired to collect the debt, but they don’t own it. If the agency doesn’t succeed, a collection law firm may be hired to file a lawsuit.

If the company suing you is a debt buyer, collection agency, or collection law firm, you can send letters asking them to verify the debt. These businesses are all considered debt collectors under the Fair Debt Collection Practices Act (FDCPA), a federal law that gives you specific rights and protections.

Note: If you're not sure whether the papers you received are from a real court case, contact the court clerk. You can ask them to confirm the case number, name, and other details. Creditors sometimes file lawsuits with incorrect information, and you still need to respond to protect your rights.

How a debt collection judgment impacts you

If a creditor gets a judgment against you, they are allowed to take additional steps to collect the money. A judgment can also affect your finances in other ways.

The judgment may allow the creditor to:

• Collect interest on top of the original balance,
• Report the debt on your credit report for seven years, and
• Appear in some background checks.

Some judgments can also be discharged in bankruptcy.

How interest works on judgments

The interest that can be added to a judgment depends on when the judgment was entered.

• Before January 1, 2020: Interest was always 9% per year, no matter how much you owed.
• On or after January 1, 2020: The interest rate depends on the amount of the judgment.

If the judgment is for:

• $25,000 or less, the interest rate is 5% per year.
• More than $25,000, the interest rate is 9% per year.

Consumer debt is debt used primarily for personal, family, or household purposes. It is defined in Illinois Supreme Court Rule 280.1(f), state law 735 ILCS 5/2-1303(b), and the FDCPA at 15 U.S.C. § 1692a. Business debt, including sole proprietor debt, is not consumer debt.

How debt shows up on your background check

Negative information about a consumer debt can stay on your credit report for seven years. This may make it harder to get loans or credit, or result in higher interest rates.

A judgment usually won’t appear on your credit report, but it can show up in background checks. That’s because background checks often include searches of court records, and court records are public information.

If any incorrect information appears in a report about you, learn how to dispute it in Disputing inaccurate information on your credit report or background check.

What happens if you ignore a collection lawsuit

If you choose to ignore a debt collection lawsuit, you must still follow any court orders or citations to discover assets directed to you.

If you don’t follow a court order, the judge can order your property to be turned over to the creditor. The judge may issue a warrant to have you arrested and brought to court, also known as a body attachment. This can happen if you fail to appear after being ordered to do so.

When it may make sense to ignore the lawsuit

You can learn more about the debt collection court process in Responding to a debt collection lawsuit basics and Discovery and motions in consumer debt cases basics.

In some situations, ignoring a debt lawsuit may be a reasonable option. This depends on your legal rights and financial situation. The following four statements must all be true:

• The debt is not for child support, spousal support, taxes, federal student loans, government fines, or fraudulent activity,
• You’re certain the debt and the amount listed in the complaint are accurate,
• You are currently collection-proof, and
• You expect to remain collection-proof for the full judgment period, which may last 21 or 27 years.

Note: Being collection-proof means that your income and assets are protected by law from collection. It doesn’t prevent you from making voluntary payments or limit sharing information about the judgment against you in public records or background checks. If you choose to participate in the lawsuit, you may accidentally agree to pay money the creditor couldn’t otherwise collect.

After a debt collection judgment is entered

If the court enters a judgment against you, you may receive a citation to discover assets.

If you are ordered to appear in court, or receive a citation directed to you, you must go to court even if you didn’t participate in earlier hearings. At the hearing, you can explain that your income and property are collection-proof.

You will also need to bring documents that show your financial situation.

If your wages or account are already being taken

If you receive a citation to discover assets directed to your employer or your bank, you must follow your court’s procedure to claim exemptions. This may include:

• Contacting the court to request a hearing, and
• Bringing documents that show your finances.

If your wages are already being garnished, or your bank account is already frozen, you can file an emergency motion to claim exemption.